Although encouraging news has recently been released regarding the real estate sector and the exchange traded funds (ETFs) that track it, many suggest that an immediate recovery is still not imminent. 

Signs of trouble in the real estate market still persist: new home sales dropped 0.6% in May, falling short of economists’ forecasts. There’s also a 10-month backlog of new homes.

The Mortgage Bankers Association has recently announced that it expects refinancing volumes to reach $1.3 trillion this year, down from the $2 trillion it had previously projected forcing it to place its optimistic outlook the industry on the back burner.  This means that fewer homeowners will refinance their houses, in hopes of cheaper mortgages and a little extra spending cash, states Tom Petruno of The Los Angeles Times.

On reason that this forecast has been scaled back is the recent rebound in home loan rates, which have been pushed up by rising long-term bond yields, thanks to the government’s borrowing spree.

An ETF that could be directly influenced is the iShares Dow Jones U.S. Real Estate Index Fund (IYR) which is  down 14% year-to-date.

For more stories on real estate, visit our real estate category.

Kevin Grewal contributed to this article.

Tags: IYR, Real Estate, Retail, RTH, Sector ETFs